Bad Accounting Results in U.C. Financial Woes

The Undergraduate Council has found itself strikingly short of funds this fall due to years of inadequate accounting measures, Council Treasurer Edward B. Smith III '97 said yesterday.

The council's Campus Life and Student Affairs committees are now operating with about $15,000, less than half of what was expected.

Previous commitments, including the Freshman Formal, will temporarily tie up much of the council's remaining funds, potentially lowering the committees' operating budget to as low as $5,000.

"It's tight," Smith said. "It makes us all nervous, but I think it will be all right."

According to Smith, much better accounting by the council in the last two semesters will prevent this kind of shortage from happening again.

"We're just going to have to suck it up this year, but we should be OK in the future," Smith said.

Smith estimated an additional $5,000 will be collected in December from uncollected grants allocated to student organizations last spring.

The council will also receive term bill fees of $1,000 to $2,000 from students who enroll at midyear, Smith said.

These incomes and other expected miscellaneous funds will amount to approximately $10,000. Additional revenues collected from the Freshman Formal will leave the council with a total of about $20,000 until the end of the year.

Administrators did not seem worried about the council's finances yesterday.

But according to Assistant Dean of Students Sarah Flatley, the administration is seeking to increase financial accountability for all student groups, which are currently required to submit budgets to the administration every year.

"We've been working with all student groups to have better reporting practices," Flatley said. "We've brought in outside consultants to teach student groups how to provide better accounting."

According to Dean of the College Harry R. Lewis '67, the council does receive some additional scrutiny because of its large budget.

Flatley said the council's budget last year was "pretty detailed."

Poor Accounting

Smith said the council has a funding shortage because past treasurers essentially failed to balance the council's checkbook.

"People would just write checks and assume we have the money to cover them," he said.

Only with last semester's treasurer, Brian R. Blais '97, did the council make a concerted effort to determine its balance on a regular basis, Smith said.

According to Blais, when he took over as treasurer, the records of the council's finances--a pile of receipts and bank statements--were handed to him in an empty Corona beer box.

"To be frank, it was a mess," Blais said. "We were bouncing checks all the time first semester last year, and nobody ever balanced the checkbook."

A major accounting problem which led to the unexpected lack of funds was the Finance Committee's previous methods of dealing with grant money.

Student groups often do not immediately claim the grants the Finance Committee allocates them, leaving the committee with a significant surplus of funds.

Since student groups have several more months to pick up their money, much of that money will eventually go to the student groups to which it was allocated.

In the past, however, all of this money was rolled over into the council's general committee fund for use by the Campus Life and Student Affairs committees the following semester, Blais said.

In essence, the council traditionally "ignored" whatever grants it still had to give out, Smith said. The cumulative result over the course of several years is part of the unexpected shortage of funds this year.

Rather than being short of money, last year's council members thought the budget would be in excess of previous years this fall due to the rollover from grants they thought had been accumulating for some time.

More problems occurred with the council's finances due to spending on this fall's Gala Ball.

Thinking its finances were much more sound than they actually were, the council allocated $15,000 to the Campus Life Committee last spring to help pay for the Gala Ball, Smith said.

Not all of that money was spent during the spring semester, however. The money that committee did not spend was spent by the council for other projects or rolled over for this year's council.

The net result was that this year's council had to provide about $12,000 to cover ball expenses that members thought had already been paid for the last spring, Smith explained.

In effect, instead of having a large rollover for its committee fund, the council found itself saddled with debt this year.

Good Accounting

Smith said he has taken a number of steps to make sure that this kind of bad accounting does not happen again in the future.

First, all of the council's finances have been computerized so that council members can know exactly how much money they have at any given time.

"It sounds like common sense to do it that way, but we've only been doing it since Brian Blais took over last semester," Smith said. "We can see what we've spent on everything with a click of a button. That was impossible before because we had no records."

Second, any check over a small amount requires two signatures, from either the council's president, vice-president or treasurer.

"It's very hard to abuse funds that way," Smith commented.

Third, contracts for expenditures must be signed by the treasurer, not the person in charge of the event.

"That makes sure the system is absolutely tight," Smith said. "There aren't any loose ends."

These changes will bring the council into a new era of fiscal responsibility, Smith said.

"I hate to be the bearer of bad news all the time, but I'd rather do that than let the council go bankrupt," Smith said. "I'm trying to give a correct impression so we know how much money we have and how much we are spending. I want to start a tradition of fiscal certainty."

A number of options are open to the council to increase funding for the future, Smith said.

Some council members have started thinking about running fund raisers to increase council income.

Other council members are calling for another referendum to increase the council's term bill fee from $20 to $30 or $40 per year.

Another option being explored is to set aside money each year to create a "slush fund" so that the council can back large events like concerts until it collects ticket revenue.

According to Smith, all of these options are a long way off, but will eventually be possible due to better accountability of funds.

According to council president Robert M. Hyman '98-'97, the lack of funds this winter will not keep the council from working to increase its relevance to students.

Grants to student groups will be unaffected by the shortage of funds, Hyman said. As well, the council can concentrate on ways to affect student life that don't cost money.

"All of the work we do with the administration on issues that matter to students is generally not costly," Hyman said. "I think we can definitely be relevant without having as much money as in the past."

Hyman said he is concerned with the situation, but feels it will not be crippling to the council. "It's disturbing to say the least, but this council has proven itself in so many ways already," Hyman said. "This is another obstacle, but it is one we will be able to overcome.

According to Dean of the College Harry R. Lewis '67, the council does receive some additional scrutiny because of its large budget.

Flatley said the council's budget last year was "pretty detailed."

Poor Accounting

Smith said the council has a funding shortage because past treasurers essentially failed to balance the council's checkbook.

"People would just write checks and assume we have the money to cover them," he said.

Only with last semester's treasurer, Brian R. Blais '97, did the council make a concerted effort to determine its balance on a regular basis, Smith said.

According to Blais, when he took over as treasurer, the records of the council's finances--a pile of receipts and bank statements--were handed to him in an empty Corona beer box.

"To be frank, it was a mess," Blais said. "We were bouncing checks all the time first semester last year, and nobody ever balanced the checkbook."

A major accounting problem which led to the unexpected lack of funds was the Finance Committee's previous methods of dealing with grant money.

Student groups often do not immediately claim the grants the Finance Committee allocates them, leaving the committee with a significant surplus of funds.

Since student groups have several more months to pick up their money, much of that money will eventually go to the student groups to which it was allocated.

In the past, however, all of this money was rolled over into the council's general committee fund for use by the Campus Life and Student Affairs committees the following semester, Blais said.

In essence, the council traditionally "ignored" whatever grants it still had to give out, Smith said. The cumulative result over the course of several years is part of the unexpected shortage of funds this year.

Rather than being short of money, last year's council members thought the budget would be in excess of previous years this fall due to the rollover from grants they thought had been accumulating for some time.

More problems occurred with the council's finances due to spending on this fall's Gala Ball.

Thinking its finances were much more sound than they actually were, the council allocated $15,000 to the Campus Life Committee last spring to help pay for the Gala Ball, Smith said.

Not all of that money was spent during the spring semester, however. The money that committee did not spend was spent by the council for other projects or rolled over for this year's council.

The net result was that this year's council had to provide about $12,000 to cover ball expenses that members thought had already been paid for the last spring, Smith explained.

In effect, instead of having a large rollover for its committee fund, the council found itself saddled with debt this year.

Good Accounting

Smith said he has taken a number of steps to make sure that this kind of bad accounting does not happen again in the future.

First, all of the council's finances have been computerized so that council members can know exactly how much money they have at any given time.

"It sounds like common sense to do it that way, but we've only been doing it since Brian Blais took over last semester," Smith said. "We can see what we've spent on everything with a click of a button. That was impossible before because we had no records."

Second, any check over a small amount requires two signatures, from either the council's president, vice-president or treasurer.

"It's very hard to abuse funds that way," Smith commented.

Third, contracts for expenditures must be signed by the treasurer, not the person in charge of the event.

"That makes sure the system is absolutely tight," Smith said. "There aren't any loose ends."

These changes will bring the council into a new era of fiscal responsibility, Smith said.

"I hate to be the bearer of bad news all the time, but I'd rather do that than let the council go bankrupt," Smith said. "I'm trying to give a correct impression so we know how much money we have and how much we are spending. I want to start a tradition of fiscal certainty."

A number of options are open to the council to increase funding for the future, Smith said.

Some council members have started thinking about running fund raisers to increase council income.

Other council members are calling for another referendum to increase the council's term bill fee from $20 to $30 or $40 per year.

Another option being explored is to set aside money each year to create a "slush fund" so that the council can back large events like concerts until it collects ticket revenue.

According to Smith, all of these options are a long way off, but will eventually be possible due to better accountability of funds.

According to council president Robert M. Hyman '98-'97, the lack of funds this winter will not keep the council from working to increase its relevance to students.

Grants to student groups will be unaffected by the shortage of funds, Hyman said. As well, the council can concentrate on ways to affect student life that don't cost money.

"All of the work we do with the administration on issues that matter to students is generally not costly," Hyman said. "I think we can definitely be relevant without having as much money as in the past."

Hyman said he is concerned with the situation, but feels it will not be crippling to the council. "It's disturbing to say the least, but this council has proven itself in so many ways already," Hyman said. "This is another obstacle, but it is one we will be able to overcome.